CLEVELAND, Ohio -- Cuyahoga County Executive Ed FitzGerald's college savings
account program will cost taxpayers $522,000 in annual overhead, about
one-quarter of the program's $2 million budget, county records show.

That percentage is significantly more than the vast majority of large charities spend to administer
their programs, according to Charity Navigator, a non-profit watchdog that
tracks budgets of $1 million or more.

Of the 7,000 philanthropic agencies Charity Navigator tracks, less than 4
percent spend a quarter or more of their budgets on administrative costs, Miniutti said. Most spend 15 percent or less, she said.

The program's likely overhead is drawing criticism from County Councilman
Dave Greenspan, a Republican who has frequently questioned initiatives by FitzGerald
since the Democratic county executive announced he is running for governor.

"Would you as a taxpayer give to a charity that had at least a
[25 percent] administrative burden on the giving?" Greenspan said. "The answer is no.
I believe it's no. I wouldn't do it."

But the FitzGerald administration objected Friday to comparing the savings account program's administrative expenses to those of charities.

"This program cannot be easily compared to this broad set of non-profit organizations. It has to be judged on its own merits," said Matt Carroll, chief of staff to FitzGerald.

Carroll said the overhead ratio also doesn't take into account expected donations from private and charitable organizations. So far, however, the county has not lined up any donations.

"The overall value of this program is that it will change the culture of savings in this community, and that has its own value beyond the specific value in dollars involved," Carroll said.

With County Council approval, FitzGerald created the savings account program
in April to encourage more children to plan for a college education.

The program calls for the county to automatically open $100 savings accounts
in the name of each kindergartner in the county. Deposits can increase the
accounts, which otherwise can't be touched until the child is ready to spend
the money on college or other post-secondary education.

If the money is unused when the account owner turns 25, the county takes its
$100 back, while any money deposited by others is returned to the student.

Questions about the overhead arose last month, when the FitzGerald
administration returned before County Council with proposed legislation to fund
the program. That legislation includes new details about the administrative
costs.

Among the program's costs: hiring a new employee to manage the accounts,
printing and mailing promotional folders to the homes of families after the
accounts are opened, and technology costs, according to a memo sent to council.
(See document below.)

Of the costs, $122,200 would be to assign two existing county employees to
the program part-time. The rest would be new county spending.

Miniutti, at Charity Navigator, said overhead costs aren't the only way of
judging a charity, but they are important.

"I think that's the piece that donors think of first. They want to make sure
they're getting their money's worth," she said.

Greenspan said the overhead for the county program could look worse
considering the county will pay the administrative costs whether the accounts
end up being used or not.

A similar program in San Francisco only had a 12 percent participation rate
within its first three years. FitzGerald hopes to improve
on those results by marketing his version of the program.

The county council's budget and
finance committee will debate the request Monday.

The FitzGerald administration had hoped to launch the savings account this
month. But concerns from county council over the program's details have delayed
it.

Even if council were to approve the funding at its
next meeting on Tuesday, getting the program up and running would take several months, said Ken Surratt, a FitzGerald aide who is overseeing the project.

Surratt said the
administrative costs are justified and the program is worthy of taxpayer
support.

"I think it could really change the culture of the county and how we
look at post-secondary education," he said.

Asked about Greenspan's concerns, Surratt said the savings account program's
per-employee costs are comparable to those of the Ohio Tuition Trust Authority,
a state government agency that helps manage and promote 529 plans, a different
type of college savings account created under IRS code, similar to a 401(k).

The county's account program would have the equivalent of 2.3 full-time
employees and a per-employee cost of $226,521. The Ohio Tuition Trust Authority,
with 40 employees and a budget of $9.4 million, has a per-employee cost of
$235,000.

But the tuition trust authority also is a significantly larger agency that oversees 632,000 accounts and
more than $7.2 billion in assets, according to documents Surratt provided to
back up his assertion.

Surratt said he considers the two programs to be comparable.

"It may look high, but I think if you look at what our administrative
costs are per full-time employee and compare it to the Ohio Tuition Trust
Authority, which provides a similar service, I think that we're on par,"
Surratt said.

Councilman Dale Miller, a Democrat and the chair of council's budget and
finance committee, said he had his own questions about the program's details,
but that the administration has addressed them.

"It's a very important program for the executive and I think that low
college participation rates is one of the biggest problems that we have in
Cuyahoga County," Miller said. "I think this program can help."

Asked about the program's cost, Miller said it could be offset if the
accounts attract contributions from charitable foundations and other private
non-profits, as well as from the families of the students.

"If we get that kind of leverage, then the administrative cost is
looking cheap," Miller said. "But if we don't get any money into the
program other than our own, then it's looking expensive. So what I'm saying is
for me, the critical thing is to invest the time, effort, resources and energy
that we need to create the partnerships and really get the parents and
involved."